The Elder and Disability Law Firm, APC
Charitable Giving with a CRUT
In many instances you can reduce your tax liability while you give to charity. This is a win-win situation for everyone concerned, and there are a number of different vehicles of charitable giving that can be utilized. One of these is the CRUT or charitable remainder unitrust.
The way that these instruments work is that you select both a charitable and a non-charitable beneficiary. The non-charitable beneficiary is going to receive annuity payments throughout the term of the trust so most people who create one of these trusts will act as their own non-charitable beneficiary.
The annual annuity payments made to the non-charitable beneficiary must equal between 5% and 50% of the value of the trust, and at the end of its term the charitable beneficiary must assume ownership of at least 10% of the initial contribution.
When you create one of these trusts you are removing the assets that you used to fund it from your estate and this can reduce your estate tax liability.
If you fund the trust with appreciated securities you could have the trust sell them and your capital gains responsibility would be spread out over the term of the trust rather than being due in one lump sum. You are also entitled to a charitable deduction based on IRS regulations governing charitable remainder unitrusts.
Should you be interested in learning more about vehicles of charitable giving that provide tax efficiency such as the CRUT, don't hesitate to make an appointment to speak with a good Riverside estate planning lawyer.